As 2023 closes its curtains, nonfungible tokens (NFTs) continue to be a big part of the Web3 space. Community members are looking to 2024 with bullish eyes, believing the future has a lot in store for the asset class.
From NFT gaming taking off to continued regulatory uncertainty, Cointelegraph spoke with various Web3 professionals, who shared their perspectives and predictions on which trends may continue into 2024, as well as what challenges NFTs may face in the year ahead.
NFT predictions for 2024
Connections between digital and physical
Professionals working in Web3 predict further development in the connection between digital and physical assets in 2024. The NFT space is set to play a part in this intersection, according to John Crain, co-founder and CEO of SuperRare Labs — the entity behind NFT marketplace SuperRare.
Crain believes there will be a “significant rise” in the connection between the two worlds and that NFTs will play the role of “digital twins and certificates of authenticity.” Furthermore, Crain told Cointelegraph that since collectors love physical editions of NFT art, it could be another growth driver over the next year.
Throughout 2023, the tokenization of real-world assets (RWAs) has been a major discussion within various parts of the crypto space. Oh Thongsrinoon, chief marketing officer of Altava Group — which connects luxury fashion brands with Web3 — told Cointelegraph that this trend will continue in 2024.
2/ Prediction 2: RWA TokenizationReal World Asset (RWA) tokenization will drive the blockchain economy, led by real estate and commodities. Tokenized RWAs on XRP Ledger will enhance collateralized loans, improve interoperability, and attract institutional adoption, reshaping…
— Ripple (@Ripple) December 20, 2023
Thongsrinoon explained that NFTs are more than just profile pictures (PFPs): “We’ve always been a big believer in NFT having utilities and value beyond just a PFP.” In addition, the executive shared that Altava has applied RWA tokenization to NFT collections for its clients, with utilities like branded merchandise, intellectual property ownership and management, exclusive access and product consultations.
The executive added that RWA tokenization would allow NFTs to “transcend speculation” and have real-world value backing the assets. Thongsrinoon also noted that he can see NFTs penetrating industries like precious metals and real estate in 2024.
Vineet Budki, CEO of Web3 venture firm Cypher Capital, also made similar predictions. “Beyond the initial hype, 2024 will see NFTs mature into valuable tools with real-world applications. Expect fractional ownership of assets, dynamic digital experiences and hybrid physical-digital blends,” Budki told Contelegraph.
NFT gaming taking off in 2024
Another area in which NFTs are expected to play a role in 2024 is gaming. Jason Lau, chief innovation officer at crypto exchange OKX, told Cointelegraph that while some gamers are apprehensive about Web3 games and NFTs, video game companies have been diving into the space. The executive cited Square Enix’s game Symbiogenesis and Mythical Games’ NFL Rivals, both of which use NFTs. Lau explained:
“In 2024, I expect a new wave of Web3-enabled games will expose NFTs and new ways to use them to a wider range of gamers as user ownership of digital in-game items, characters and assets bring greater engagement and open up new business models and gameplay.”
Crain also echoed Lau’s sentiments. According to the executive, the first iteration of NFT games relied on nonfungible tokens as the novel part of the games instead of building fun games for players. Crain expects 2024 to be different, as some games have already started going in a different direction: “We’re finally seeing Web3 game studios building awesome games that leverage NFTs and tokens as well.”
In a previous statement, Henry Chang, CEO of the South Korean game development company Wemade, predicted that there will be an increase in blockchain-based games in 2024. Chang explained that as developers gain more experience and confidence in applying Web3 elements within games, the gaming community can expect more sophisticated use of blockchain in-game mechanics and gameplay.
Bitcoin NFTs further enter the mainstream
With Bitcoin-based NFTs taking the space by storm in 2023, Web3 professionals expect the niche to grow further next year. Lau believes that the trend of placing NFTs on the Bitcoin network will continue in 2024 as educators become more “educated and discerning.” The executive said many have grown weary of NFT projects that were nothing more than a “quick cash grab.”
Ordinals Markets Surge in 2023!
Trading volumes for #Bitcoin Ordinals skyrocketed, showcasing vibrant market activity.
With an impressive overall volume of over $1.2B and over 1.4 million trades, the demand for unique digital assets on Bitcoin is unmistakable. pic.twitter.com/Yrad9ukmVo
— Thesis* (@thesis_co) December 26, 2023
Lau also said that Bitcoin Ordinals showed “surprising staying power.” The executive said that one appeal of Ordinals is that the NFTs’ art and data are stored directly on-chain. Lau added that this allows participants to benefit from the scarcity, security and immutability inherent in the Bitcoin blockchain.
Thongsrinoon is also convinced that Bitcoin NFTs could further thrive in 2024. The executive said that while NFTs took a beating in 2023, Bitcoin-based NFTs gathered momentum. He believes this is great for crypto and can contribute to resurrecting the interest in the metaverse.
Challenges for NFTs in 2024
Overcoming stigma and exhaustion
One of the biggest challenges that the space will face in 2024 is changing the public narrative toward NFTs, according to the professionals Cointelegraph spoke with. Crain said that NFT projects must work hard to help change the public perception that the technology is only used for scams. “There’s a lot of work to be done, but by building engaging products and providing real value, we will see the public perception begin to shift,” Crain shared.
Meanwhile, Lau shared that the cyclical nature of crypto also applies to NFTs. The executive believes that many who learned and dabbled into NFTs in the last cycle are still “highly skeptical” that NFTs have moved beyond the previous false promises. However, Lau believes there have been positive signs of recovery near the end of 2023.
Thongsrinoon believes that the projects that survived the crypto winter must be innovative. The executive highlighted that the emergence of Bitcoin NFTs may help facilitate and fast-track the recovery of the NFT space by creating healthy competition and reviving interest in the NFT space overall.
Regulatory issues surrounding NFTs will continue
In 2023, the United States Securities and Exchange Commission, the nation’s securities regulator, took aim at the NFT space. It filed its first unregistered securities claim against an NFT collection sold by entertainment company Impact Theory. Many disagreed with the SEC’s approach, with some commenting that it’s problematic for the regulator to imply that all NFTs are securities.
The SEC suing Impact Theory for selling NFT securities is a pretty big deal.
Because if you take a closer look at the details, the description applies to quite a few NFT projects – probably also to one you are holding right now. pic.twitter.com/75kY0QQIDG
— wale.moca (@waleswoosh) August 28, 2023
According to Lau, NFTs remain a “gray area” even though jurisdictions are beginning to create clarity around crypto assets. The executive pointed toward the Markets in Crypto-Assets (MiCA) regulation, the European Union’s comprehensive legislation on crypto, highlighting that it leaves NFTs and unique assets out of its scope.
Budki also shared similar sentiments, saying that the situation creates uncertainty for businesses and investors. The executive highlighted that as NFTs continue to grow in 2024, the space needs a clear legal landscape.
Future of NFTs
When asked about their thoughts on the future of NFTs, the executives expressed bullish opinions on the technology. Crain believes that NFTs will become standard infrastructure for the internet. The executive highlighted that NFTs provide a simple, effective “mechanism for provenance” of digital content. He explained:
“This will have profound implications, especially in a world with AI capabilities increasing at an exponential rate. Being able to discern what is real and what is not will be an incredibly important feature in the next phase of the internet.”
Meanwhile, Lau doubled down on the role of RWA tokenization and NFTs in representing what humans find valuable in the digital and physical space. In addition, the executive described NFTs as a blank canvas that can morph and adapt to capture an “endless range of possibilities.”